Asian shares inched higher on Tuesday as investors increasingly expect the European Central Bank to expand liquidity as soon as next week to boost the sagging euro zone economy – just as the U.S. Federal Reserve plans to end its bond-buying drive.
The euro slipped to a one-year low against the dollar as comments from ECB chief Mario Draghi late last week that the central bank was prepared to respond with all its “available” tools resonated in the market. “Draghi’s speech marked a turning point in ECB rhetoric… He also confirmed that beyond liquidity injections through the targeted longer-term refinancing operations (TLTRO) and outright asset-backed securities (ABS) purchases, the ECB was ready to do more if necessary,” Philippe Gudin, an economist at Barclays, said in report.
MSCI’s dollar-denominated index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ticked up 0.1 percent, led by 0.3 percent gains in South Korean shares. Japan’s Nikkei average .N225 bucked the trend, shedding 0.4 percent on profit-taking. The mood in the market was buttressed by the S&P 500 .SPX, which briefly topped the 2,000 mark for the first time in history on Monday, and closed up 0.48 percent at 1,997.92.